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Subway Sandwiches & Salads' nimble growth strategy embodies the future of fast-food: build small, no-frills restaurants everywhere customers live, work or play.

Subway's annual sales of $2.2 billion in 1994, supported by rapid store growth and a 32% boost in media ad spending, propelled it into the Top 10 fast-feeders. Its 10% growth in sales far outpaced the industry standard.

Subway now operates 9,690 full-sized restaurants, a close second to McDonald's 9,928 full-sized units.

McDonald's still focuses on friendliness, as in the "Have you had your break today?" tagline that came with its latest ad campaign started in February.

McDonald's continues to move media funds into network and away from spot TV as it overhauls its promotional calendar. McDonald's last year regrouped its 40 U.S. regions into five sections and now runs the same promotion throughout an entire section.

National agencies Leo Burnett USA and DDB Needham Worldwide, both Chicago, buy media for entire sections at about 70% the cost if bought locally.

McDonald's registered a marketing first last fall when it sold compact discs through its 9,500 restaurants in a promotion with EMI Records Group North America. But McDonald's annual holiday video promotion, a hit with customers, turned into a bomb last year with video retailers and Walt Disney Co. The complaint: its discount prices undermined the value of videos.

Partly to maintain favorable status with Disney, Big Mac this Christmas will run an encore Monopoly sweepstakes game.

Movie tie-ins continue to drive summer sales. Last year Burger King's tie-in with Disney's "The Lion King," one of Hollywood's few summer '94 blockbusters, tripled sales of Burger King kids meals. This summer, BK linked with the same studio's "Pocahontas" and generated 10% growth in kids meal over "Lion King" levels. McDonald's pulled strong sales from its "Batman Forever" tie-in.

With its back-to-basics marketing strategy firmly in place, Burger King is free to seek growth through new channels, like sports marketing deals and increased development of satellite restaurants. Since 1989, 6,300-unit Burger King has opened 400 satellites and sees these units as a major growth vehicle for the '90s.

McDonald's, an official sponsor of the National Football League and National Basketball Association, will find mounting competition from Burger King in sports marketing. Burger King this month makes its first major move into sports marketing with a national promotion tied to the College Football Hall of Fame.

What may become a favored growth vehicle for PepsiCo, parent of KFC Corp., Taco Bell Corp. and Pizza Hut, is dual-branding, evidenced by the opening this summer of nearly 100 KFC/Taco Bell tandem units. Taco Bell and KFC could open as many as 800 in the U.S. if the "test" proves successful.

Taco Bell plans to develop over 200,000 "points of access" by the year 2000, including airport carts, convenience stores and schools. For now, the 8,600-unit chain is working to integrate new marketing programs-the lowfat Border Lights menu and a monthly kids promotion-into the core Taco Bell brand.

Taco Bell originally estimated that Border Lights, launched this spring with a $75 million campaign, would generate half the chain's sales by the end of the decade. Border Lights now represents roughly 20% of total sales.

KFC in March focused ads more closely on entire meal sales with the launch of the "Everybody Needs a Little KFC" campaign. KFC has only 102 non-traditional restaurants but is making inroads into home delivery, with 437 stores now offering the service.

Pizza Hut's launch this year of Stuffed Crust pizza with a star-studden $45 million campaign was largely responsible for boosting same-store sales 14% in second quarter, reversing several quarters of sales declines.

Hardee's Food Systems underwent a makeover this year, moving its ad account to Tatham Euro RSCG and launching the new tagline, "Fresh from the kitchen at Hardee's." The summer tie-in with "Apollo 13" failed to lift sales, says senior VP-marketing Nancy Abram.

In the pizza segment, Little Caesars Pizza, ousted from the Top 10 by Subway, could return if an ambitious pizza delivery rollout bears fruit.

Deliver leader Domino's Pizza is out to broaden its image with ads focusing on taste. Under new Marketing Director Cheryl Bachelder, the chain is beefing up sports marketing affiliations and other promotional activities to drive sales.

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